Biography

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Early
years

Davíð Oddsson was born in Reykjavík. His father was a medical doctor,
and his mother a secretary. His parents were not married, and he
was brought up in his maternal grandfather’s home in Selfoss, a small
town in the south of Iceland, until his grandfather died. He then
moved with his mother and grandmother to Reykjavík. He took an
early interest in acting and attended an acting school for a while.
He also attended the gymnasiumMenntaskólinn í Reykjavík
where he graduated in the spring of 1970. Davíð married Ástríður
Thorarensen, a nurse; they have one son, Þorsteinn who is a judge
at the district court at Akureyri. The next six years, Davíð read
law at the University of Iceland, working
almost full-time as well. He was assistant to the director of a
small theatre (now the Borgarleikhúsið) for a while, and produced,
with two friends (Þórarinn Eldjárn and Hrafn
Gunnlaugsson), a popular radio comedy show for two years; he
was for a while a political commentator at the newspaper Morgunblaðið, and the director of
publication of Almenna bókafélagið, a conservative publishing
house. He had been elected to the Municipal Council in Reykjavík in 1974, for
the Independence Party.

Mayor of
Reykjavík (1982–1991)

Davíð Oddsson was a member of a group of young
conservative-libertarians within the Independence Party who
felt that the party should support more strongly attempts to extend
economic
freedom in the heavily regulated Icelandic economy. The group
included Þorsteinn Pálsson, Geir H. Haarde, Jón Steinar Gunnlaugsson,
Kjartan
Gunnarsson, Magnús Gunnarsson, Brynjólfur Bjarnason and Hannes Hólmsteinn
Gissurarson, and they published the magazine Eimreiðin
from 1972 to 1975; in the following years they followed with
interest what was happening in the United Kingdom under Margaret
Thatcher and in the United States under Ronald Reagan; they
also read books and articles by and about Milton
Friedman, Friedrich Hayek and James M.
Buchanan, who all visited Iceland in the early 1980s and whose
messages of limited governments, privatisation, and
liberalisation of the economy had a wide impact. Davíð got a chance
to further his ideals when, in 1982, the Independence Party, under
his leadership, regained the majority in the Reykjavík Municipal
Council which it had lost four years earlier to three left-wing
parties. Davíð swiftly reduced the number of Council members from
21 to 15, and merged the largest fishing firm in Reykjavik which
belonged to the municipality and had been a huge burden, with a
private fishing firm and then sold off the municipality’s assets in
the new firm, Grandi,
now one of the biggest fishing firms in Iceland. Incidentally, the
director of Grandi, Brynjólfur Bjarnason, who oversaw
what was Davíð’s first privatisation, later became the director of
the Icelandic Telephone Company which turned out to be Davíð’s last
privatisation in government (2005). As Mayor of Reykjavík, Davíð
was behind the building of Reykjavík City Hall by The Pond in Reykjavík, and
of Perlan, a revolving
restaurant over the old water tanks in Öskjuhlíð.
Despite his libertarian leanings, Davíð also
supported the Reykjavík City Theatre, in particular the building of
a new theatre house which was opened in 1989. In the nine years
when Davíð was Mayor of Reykjavík, a new district, Grafarvogur, was built
and a new shopping area around the shopping mall Kringlan. A forceful and
uncompromising Mayor of Reykjavík, Davíð was much-criticized by the
left-wing opposition in the Municipal Council.

Alliance
with the Social Democrats (1991–1995)

In 1983, Davíð Oddsson’s old friend and ally, Þorsteinn Pálsson, had been elected
leader of the Independence Party, and in
1989 Davíð had been elected deputy leader, or Vice-Chairman of the
Party. After Þorsteinn Pálsson had to resign as Prime
Minister in 1988, after falling out with the leaders of his two
coalition parties, there was a widespread feeling in the party that
its leadership should be changed, and much pressure on Davíð to
stand against Þorsteinn. This he did in 1991, and became leader of
the Independence Party. Under
Davíð Oddsson’s leadership, in the parliamentary elections of 1991,
the Independence Party
regained most of the support it had lost in 1987 when it had been
severely weakened because of a split in its ranks. In record time,
Davíð formed a coalition government with the social democrats, Alþýðuflokkurinn,
whose leader, Jón Baldvin Hannibalsson,
became Minister of Foreign Affairs. Jón Baldvin and Davíð jointly
decided that Iceland should become the first state to recognise the
reinstatement of the sovereignty and independence of the three
Baltic countries, Estonia,
Latvia and Lithuania, after the fall
of Soviet Union.

Davíð’s government inherited a huge budget deficit and a burden
of unproductive investments; much money had been spent on fish
farming for example, with little result. Inflationary pressures
were also building up, while some fish stocks in the Icelandic
waters were being depleted. The budget deficit was turned into a
surplus in 1996, not least because of the close cooperation between
Davíð and Friðrik Sophusson, the Minister of
Finance, who had also been a prominent young libertarian.
There was a surplus almost continuously since then, which has been
used to reduce the public debt, and also to reform the pension
system, which is now almost wholly self-supporting, while some
small companies were privatised. Monetary constraints were imposed
by making the Central Bank largely
independent of any political pressures. It also helped the Davíð
Oddsson government that there was a consensus between the labour
unions and the employers that the rampant inflation of the 1980s,
with huge, but largely meaningless, nominal wage increases, could
not go on; therefore, in 1990, the unions and the employers had
signed a “National Accord”, whereby wage increased would be
moderate, and government would be assisted in bringing down
inflation. From 1991, inflation in Iceland was on a level with the
neighbouring countries.

Alliance
with the Progressive Party (1995–1999)

In 1994, the Social Democratic Party split, and as a result they
suffered a huge loss in the 1995 parliamentary elections. While in
theory the coalition government maintained its majority, it only
consisted of one seat. Davíð Oddsson therefore decided to form a
coalition with the Progressive Party. The
leader of the Progressive Party, Halldór Ásgrímsson, became Minister
of Foreign Affairs. In the new government, privatisation was
continued on a much greater scale than before: a big and important
chain of fish processing
plants was sold; part-public or public investment funds were
merged and sold as a private investment bank; the two commercial
banks under government control were sold in a few stages; The two
coalition parties accepted the loud demand by many people that a
charge would be imposed on the holders of fishing quotas.

Davíð’s two governments were staunch allies of the United States and
strongly in support of NATO, of
which Iceland is a founding member. He firmly supported the actions
undertaken by the U.S. and its allies in Afghanistan and Iraq, taking much criticism from the Icelandic
Left. Since the fall of the Soviet Union, there has been some
uncertainty about whether the United States defence force could or
should remain in Iceland, having been invited there in 1951, at the
height of the Cold War.
Davíð has not been enthusiastic about joining the European
Union.

The latter Davíð Oddsson government (1995-2004) embarked on a
course of tax cuts. It cut the corporate income tax to 18%; it
abolished the net wealth tax; it lowered the personal income tax
and inheritance tax. This combination of opening up of the economy,
fiscal and monetary stabilisation created an entrepreneurial
climate in Iceland that spurred record economic growth in the
country, with the real average income of individual households
increasing by more than 17%.

Alliance
with Progressive Party (1999–2004)

As a young man, Davíð Oddsson authored or co-authored several
plays for the stage and for television. During his days as
political leader, he pursued his literary interests as well, and in
1997, he published a collection of short stories, Nokkrir góðir
dagar án Guðnýjar, which became a best-seller in Iceland.
Davíð celebrated his 50th birthday at a huge reception in Perlan, paid for by the Independence Party, and
his friends published a festschrift of more than 500 pages where
many Icelandic writers, scholars and politicians contributed
papers. In the 1999 parliamentary
elections, Davíð’s Independence Party
retained strong support, despite the attempt by a former government
minister of the Party, Sverrir Hermannsson, to establish a
splinter party: the minister had been made director of the National
Bank of Iceland and had had to resign because of financial
irregularities. In 2002, Davíð published another collection of
short stories, Stolið frá höfundi stafrófsins, which was
also well-received.

However, in that same year, 2002, there began a controversy in
Iceland about the company Baugur, owned by the entrepreneurs Jóhannes Jónsson and his son, Jón Ásgeir Jóhannesson. A giant
on the Icelandic scene, Baugur controlled the majority of the
retailing business in Iceland: in parliament, the then-leader of
the social democratic party Össur Skarphéðinsson called for a
closer supervision on possible monopoly pricing, specifically
mentioning this company. Davíð concurred. In the summer of 2002,
the Icelandic police raided the headquarters of Baugur, after a disgruntled
former employee in their American operations had produced what he
claimed was evidence of financial irregularities. The two main
owners of Baugur did not take kindly to this and
accused Davíð of orchestrating a campaign against them. They bought
a newspaper, Fréttablaðið, which is sent free of
charge into every household in Iceland. The paper opposed Davíð in
the bitterly fought 2003 parliamentary election when there was talk
of corruption, bribery and abuse of the police. In a speech on
February 9 2003, the main spokesperson of the Social Democratic Alliance,
Ingibjörg Sólrún
Gísladóttir, suggested that Davíð might be responsible for the
tax investigation of businessman Jón Ólafsson, then owner of a private
television station, and also for the police raid on Baugur.
Paraphrasing Shakespeare, she asked: "Are you a friend
of the Prime Minister or are you not; that is the question".

Foreign Minister
(2004–2005)

Davíð Oddsson with Professor Ragnar Árnason, a leading free market
economist in Iceland, at a Mont Pelerin Society meeting in
Iceland 20 August 2005

After the 2003 elections, Davíð Oddsson and the leader of his
coalition party, Halldór Ásgrímsson, Minister of
Foreign Affairs, agreed that Davíð should remain Prime Minister
until 15 September 2004, at which time Halldór would become Prime
Minister, and that the Independence Party would, in
exchange for relinquishing the Prime Minister’s post, gain an
additional ministry in the government from its partner. In 2004 the
Davíð Oddsson government became embroiled in controversy, as Davíð
introduced a bill which would have made it impossible for large
private companies to own more than 15% in any one media, and under
which newspapers and television stations could not be owned by the
same companies. Davíð argued that this was to prevent concentration
of the media in the hands a few people, and to enable the media to
remain independent and critical not only towards politicians, but
also towards financial moguls. His critics maintained, however,
that the proposal was directly aimed at Baugur which Davíð was, they
said, obviously regarding as a political enemy. By then, Baugur had
bought another newspaper, the television station from Jón
Ólafsson and a few radio stations, and controlled more than
half of the media market. In a much-softened version, parliament
passed the media bill proposed by the government. But then, for the
first time in the history of the Icelandic Republic, in the summer
of 2004, the president, Ólafur Ragnar Grímsson, refused
to sign the bill into law. Davíð criticized this, pointing out that
the director of the television station formerly owned by Jón
Ólafsson and recently bought by Baugur, Sigurður G.
Guðjónsson, had been Ólafur Ragnar Grímsson’s campaign manager in
his first presidential campaign, and that Ólafur’s daughter was
employed by Baugur. However, Baugur enjoys considerable
goodwill in Iceland because their shops offer lower prices than are
to be found elsewhere, while their owners are seen as an embodiment
of an Icelandic dream of rags-to-riches; many also agreed that the
media bill seemed to be a part of a political duel rather than an
attempt to make general law. The conclusion of a long struggle was
that Davíð Oddsson withdrew the bill instead of holding a national
referendum on it, as required by the Icelandic constitution if the
president refuses to sign a bill into law.

During his almost 14 years as Prime Minister, Davíð became
acquainted with, or friend of, many Western leaders, including Bill Clinton, George W. Bush,
Václav Klaus
and Silvio
Berlusconi. He has occasionally attended the meetings of the Bilderberg
Group, and he has read a paper to the Mont
Pelerin Society. But he only served as Minister of Foreign
Affairs for one year. In the autumn of 2005, Davíð announced that
he would leave politics. He said that he felt that the time had
come for a new generation to take over. His close ally over many
years, Geir H. Haarde, replaced him, both as
leader of the Independence Party and
Minister of Foreign Affairs. A probable contribution to this
decision was a short, but dramatic, bout with cancer, soon after
the crisis over the failure of the media bill. He was, however,
fully cured.

Central Bank
Governor (2005–2009)

In October 2005, Davíð was appointed the Governor of the Central Bank of Iceland.
Following the collapse of the Icelandic banking system in
the autumn of 2008, the nation was forced to ask for financial help
from the International Monetary Fund
and friendly nations. Except for a few friends, the Faeroe Islands being the first followed by
unlikely but solid friends like Poland that help has not materialized. Some
blame the collapse of the system on external factors, mainly a
structural flaw in the EEA Agreement, and the ruthlessness of the
British government which put Icelandic financial institutions on
the list of terrorist organisations.[3] Others
blame it on the economic policies pursued by the Independence Party
under Davíð’s leadership, such as market liberalisation and
privatisation.[1]
Consequently, there were public calls for Davíð’s dismissal.[4][5]
Following protests outside the Central Bank, the new Prime Minister
Jóhanna Sigurðardóttir requested
that Davíð and his two fellow governors resign. He refused this
request[6]. On
February 26, 2009, following changes to the laws concerning the
Central Bank, Davíð was ousted from the bank and replaced by
Norwegian economist Svein Harald Øygard.

In April 2009, Davíð stated that Iceland needs to investigate
the “unusual and unconventional loans” given by the banks to senior
politicians during the years before the crisis.[7]

Editor of
Morgunblaðið (2009-present)

On September 24, 2009, the new owners of Morgunblaðið announced that Davíð
Oddsson and Haraldur Johannessen, former editor of business paper
Viðskiptablaðið, had been hired as editors of the
paper.[8] The
decision was announced in the wake of much speculation and rumours
about who would be the new editor after the dismissal of the
previous editor, Ólafur Þ. Stephensen.[9]